PROJECT: EVALUATING MANAGEMENT ETHICAL ISSUE Project Introduction: In this project, you will analyze multiple business situations. It will require you to perform tasks based on job-order costing as well as conversion costs with the help of problems. In addition, you will perform master budgeting and solve problems based on statement of cash flows. This project will help you understand the real-world scenario of managerial accounting with the help of the concepts it covers. Course Learning Objectives Covered: • Explain the role of managerial accounting in planning, control, and decision making. • Prepare internal corporate accounting reports used for management planning and decision making. • Analyze fact-based managerial decisions involving CVP analysis. • Evaluate investment opportunities using the capital budgeting techniques. • Evaluate performance standards and a corporation’s operations against those standards. • Choose and employ the proper financial tools needed to make financial choices. PROJECT SUBMISSION PLAN Project Part Description/Requirements of Project Part Evaluation Criteria Project Part 1  Assessment Preparation Checklist:  1. Go through the following sections in the textbook, Managerial Accounting : • Chapter 6, pp. 205–232 • Chapter 7, pp. 257–286 • Chapter 8, pp. 297–310 These chapters introduce you to cost allocation and activity-based costing, the use of cost information in management decisionmaking, and customer profitability . 2. Review the Institute of Management Accountants’ (IMA)  Statement of Ethical Professional Practice in the appendix to chapter 1 of your textbook, Managerial Accounting . This Project Part 1: You will be evaluated on the basis of project rubric . Project Pa rt Description/Requirements of Project Part Evaluation Criteria familiarizes you with the ethical principles and standards the members of IMA follow. This will help you perform Task 1 of Project Part 1. -------------------------------------------------------- Title: Costing/Ethical Decisions In Project Part 1, you will evaluate a management ethical issue, perform a job-order costing problem, and perform a  conversion costs problem outlined in the following tasks: Task 1: Management Ethical Issue Shauna Miller is an accountant at Western Building Supplies. Recently, in the course of her normal processing of transactions and related documents, she noticed that two of her company’s top sales executives were taking the purchasing agents of important customers on lavish golf vacations to Hawaii. The average cost was over $6,000 per trip.  As a member of the IMA, does Shauna have any specific obligations related to her discovery?  What steps should she consider? Task 2: Job-Order Process Costing Problem  Lane Confectioners produces special orders of sugar candies and chocolates for airlines and hotels. During March, Lane purchased, on credit, 2100 pounds of confectioner's sugar @ $.80 per pound, 2300 pounds of gran.

1. PROJECT: EVALUATING MANAGEMENT ETHICAL ISSUE
Project Introduction:
In this project, you will analyze multiple business situations. It
will require you to perform tasks based on job-order costing as
well as conversion costs with the help of problems. In addition,
you will perform master budgeting and solve problems based on
statement of cash flows. This project will help you understand
the real-world scenario of managerial accounting with the help
of the concepts it covers.
Course Learning Objectives Covered:
•
Explain the role of managerial accounting in planning, control,
and decision making.
•
Prepare internal corporate accounting reports used for
management planning and decision making.
•
Analyze fact-based managerial decisions involving CVP
analysis.
•
Evaluate investment opportunities using the capital budgeting
techniques.
•
Evaluate performance standards and a corporation’s operations
against those standards.
•
Choose and employ the proper financial tools needed to make
financial choices.

2. PROJECT SUBMISSION PLAN
Project Part
Description/Requirements of Project Part
Evaluation Criteria
Project Part
1
Assessment Preparation Checklist:
1.
Go through the following sections in the textbook,
Managerial Accounting
:
•
Chapter 6, pp. 205–232
•
Chapter 7, pp. 257–286
•
Chapter 8, pp. 297–310
These chapters introduce you to cost allocation and activity-
based costing, the use of cost information in management
decisionmaking, and customer profitability
.
2.
Review the Institute of Management Accountants’ (IMA)
Statement of Ethical Professional Practice in the appendix to
chapter 1 of your textbook,
Managerial Accounting
. This
Project Part 1:
You will be evaluated on the basis of

3. project
rubric
.
Project Pa
rt
Description/Requirements of Project Part
Evaluation Criteria
familiarizes you with the ethical principles and standards the
members of IMA follow. This will help you perform Task 1 of
Project Part 1.
--------------------------------------------------------
Title: Costing/Ethical Decisions
In Project Part 1, you will evaluate a management ethical issue,
perform a job-order costing problem, and perform a conversion
costs problem outlined in the following tasks:
Task 1: Management Ethical Issue
Shauna Miller is an accountant at Western Building Supplies.
Recently, in the course of her normal processing of transactions
and related documents, she noticed that two of her company’s
top sales executives were taking the purchasing agents of
important customers on lavish golf vacations to Hawaii. The
average cost was over $6,000 per trip.
As a member of the IMA, does Shauna have any specific
obligations related to her discovery?
What steps should she consider?
Task 2: Job-Order Process Costing Problem
Lane Confectioners produces special orders of sugar candies
and chocolates for airlines and hotels. During March, Lane
purchased, on credit, 2100 pounds of confectioner's sugar @

4. $.80 per pound, 2300 pounds of granulated sugar @ $.90 per
pound, 900 pounds of chocolate @ $4.00 per pound, and 300
pounds of caramel @ $1.50 per pound from Seattle
Confectionery Supply. In addition, it purchased for cash 60
dozen eggs @ $.85 per dozen and
2
Project Part
Description/Requirements of Project Part
Evaluation Criteria
90 pounds of paraffin @ $.50 per pound from PMG Foods
The beginning balances in the inventory accounts were:
Raw Materials Inventory
$2,500
Work in Process Inventory
$6,500
Finished Goods Inventory
$9,000
The ending balances in the inventory accounts were:
Raw Materials Inventory
$3,500
Work in Process Inventory
$5,000
Finished Goods Inventory
$6,000

5. •
Prepare the journal entry to record the transactio month of
March. Assume that over-or under-appl overhead is close to
Cost of Goods Sold.
•
Prepare an Income statement for the month of
Task 3: Conversion Costs Problem
Hartwell Drug Company produces a supplement to impro
density. Conversion costs are added evenly throughout t
production process. The following information is availabl
March:
.
ns for the ied
March.
ve bone
he
e for
Units
Units (gallons) in process, March 1 (40% complete)
400
Project Part
Description/Requirements of Project Part
Evaluation Criteria

6. Units started in March
1,000
in process
-
Units in process, March 31 (80% complete)
250
Costs
Conversion costs in WIP, March 1
Labor
$36,000
Overhead
$6,000
Labor costs in March (5,100 hours)
$102,780
Overhead in March $49,000
•
Compute the number of units completed in March.
•
Compute the cost per equivalent unit for conversion costs.
•
Compute the conversion costs included in units completed in
March.
•
Compute the conversion costs included in units at the end of
March.

7. Submission Requirements:
•
Answer each problem in detail with conclusion and results.
•
Submit your answer in a Microsoft Excel file, showing step by-
step calculations for each task.
Due:
Module 3
Grading Weight:
10%
Project Part
2
Assessment Preparation Checklist:
Go through the Chapter 14, pp. (535–552) in the textbook,
Managerial Accounting
. This chapter will introduce you to the concept of three primary
financial statements that are used to manage operations.
Project Part 2:
You will be evaluated on the basis of
project
rubric
.
Project Part
Description/Requirements of Project Part
Evaluation Criteria
Title: Costing/Ethical Decisions
In Project Part 2, you will work on an activity-based costing
(ABC) problem, perform a master budget problem, and perform
a statement of cash flows problem outlined in the
followingtasks:

8. Task 1: Activity-Based Costing Problem
The Divine Cheesecake Shoppe is a national bakery that is
known for its strawberry cheesecake. It also makes 12 different
kinds of cheesecake as well as many other types of bakery
items. It has recently adopted an activity-based costing system
to assign manufacturing overhead to products. The following
data relate to its strawberry cheesecake and the ABC cost pools:
Strawberry Cheesecake:
Annual production
17,500 units
Direct materials per unit
$6
Direct labour per unit
$2
Cost Pool Cost Cost Driver
Materials ordering
$ 72,000
Number of purchase orders
Materials inspection
$75,000
Number of receiving reports
Equipment setup
$105,000
Number of setups
Quality control
$69,000
Number of inspections
Other

9. $100,000
Direct labour cost
Total
$421 ,000
Project Part
Description/Requirements of Project Part
Evaluation Criteria
a.
Determine the overhead rate per direct labor dollar and the per
unit overhead assigned to the strawberry cheesecake.
b.
Discuss the difference in cost allocations between the
traditional method and the activity-based costing approach.
Round to three decimal places.
Task 2: Master Budget Problem
The Schrödinger Science Store operates a retail store in a local
shopping mall. The results of operations for the fourth quarter
of the past year are as follows:
•
Sales and cost of sales are expected to increase by 15 percent in
each of the next two quarters.
•
Seventy percent of sales are collected in the quarter of sale, and
25 percent are collected in the quarter following sale.
•
The balance in accounts receivable at the end of the past year
relates to sales in the fourth quarter of the past year.

10. •
Inventory purchases in the fourth quarter of the past year are
$200,000.
•
The balance in accounts payable at the end of the past year
relates to purchases in the fourth quarter of the past year.
•
Inventory at the end of the past year is $150,000. The company
plans to hold ending inventory equal to 70 percent of
subsequent quarter cost of sales.
•
Selling, general, and administrative expenses are expected to
increase by $10,000 owing to increases in advertising and
salaries. All other expenses in this category are expected to
remain constant.
Project Part
Description/Requirements of Project Part
Evaluation Criteria
•
Fifty percent of inventory purchases are paid in the quarter of
purchase, and 50 percent are paid in the following quarter. All
other expenses, including taxes, are paid in the quarter incurred.
•
Selling, general, and administrative expense includes $2,000 of
depreciation related to furniture and fixtures with a book value
(net of accumulated depreciation) of $50,000 at the end of the
past year.

11. •
The tax rate is expected to remain at 40 percent.
•
The cash balance at the end of the past year is $30,000.
•
Common stock at the end of the past year is $80,000 and
retained earnings are $137,500.
•
Asset accounts are cash, accounts receivable, inventory, and
furniture and fixtures. The only liability account is accounts
payable. Owner’s equity accounts are common stock and
retained earnings.
Based on this information, perform the following tasks:
1.
Prepare a budgeted income statement for the first quarter of the
next year.
2.
Prepare a cash budget for the first quarter of the next year.
3.
Prepare a budgeted balance sheet as of the end of the first
quarter of the next year.
4.
The company is discussing the possibility of opening a new
store late in the first quarter of the next year. A store opening
would require cash payments of $50,000.
Assuming the company wants a minimum cash balance of
$30,000 at the end of the first quarter; can a new store be

12. opened without obtaining additional funds?
Project Part
Description/Requirements of Project Part
Evaluation Criteria
Task 3: Statement of Cash Flows, Direct and Indirect Methods
The following financial statements were furnished by Patton
Company:
Patton Company Balance Sheets
Past Year
Next Year
Assets
Cash
$15,500
$17,000
Accounts receivable
$5,800
6,400
Inventory
$8,700
10,000
Prepaid expenses
$1,340
2,500
Plant and equipment
$42,200
52,500
Accumulated depreciation
($7,200)
($8,200)
Total assets

13. $66,340
$80,200
Liabilities and
Equity
Accounts payable
(all relate to inventory purchases)
$ 5,100
$6,300
Accrued wages payable
$1,200
$1,650
Common stock
$37,000
$37,000
Retained earnings
$23,040
$35,250
Total liabilities and equity
$66,340
$80,200
Project Part
Description/Requirements of Project Part
Evaluation Criteria
Patton Company Income Statement
Sales
$40,700
Less cost of goods sold
($13,200)
Gross margin
$27,500

14. Less wage expense
($10,600)
Less other operating expenses
($1,130)
Less depreciation expense
($3,560)
Net income (loss)
$12,210
In the past year, Patton purchased equipment for $25,000 and
sold some equipment for its book value (i.e., no gain or loss
resulted).
Based on this information, perform the following tasks:
1.
Prepare a statement of cash flows using the indirect method.
2.
Prepare the operating portion of Patton’s cash flow statement
using the direct method.
Source:
Jiambalvo, J. (2013).
Managerial accounting
(5th ed.).
Hoboken, NJ: Wiley.
Submission Requirements:
Submit your response in a Microsoft Excel file, showing step-
by-step calculations.
Due:
Module 6
Grading Weight:
10%